WORKING parents on Universal Credit are set for a major boost, as the Government unveils new support to cut the crippling cost of childcare.
Ministers have confirmed that Universal Credit rules will change next year to stop families from falling into a “debt trap” when they try to return to work.
The strategy targets one of the biggest barriers facing mums and dads, which is the struggle to pay upfront nursery fees before receiving their first payslip.
Under the current system, most families on Universal Credit have to shell out hundreds of pounds in advance and wait to be reimbursed, but the incoming changes will make it easier for parents returning from parental leave to get that money upfront.
The government says the move is designed to ensure more parents can get back to work and “get on” in their careers faster without facing financial penalties.
The rule change builds on the existing support system where Universal Credit claimants can already get up to 85% of their childcare costs paid back.
The Department for Work and Pensions (DWP) currently caps these payments at £1,031.88 per month for a single child and £1,768.94 for families with two or more children.
While the standard system operates on a reimbursement basis – where you pay the provider yourself and report it to the DWP to get the money back later – there are exceptions to help those with no cash flow.
Currently, parents who are starting a new job or increasing their working hours from part-time to full-time can already apply for help with upfront costs.
This support covers the first month of fees or the additional costs incurred by working more hours, and crucially, claimants do not have to pay this money back.
However, the Government will extend this eligibility to those returning from parental leave, closing a gap that previously left many facing a difficult financial hurdle.
Details and timings have not yet been confirmed, but it is understood the changes will take effect alongside the removal of the two-child benefit cap in April 2026.
Who qualifies for the cash?
To be eligible for childcare support under Universal Credit, you generally need to be in paid work or starting a job within the next month.
The rules state that if you live with a partner, both of you must be in employment, unless one partner is unable to look after the children due to a health condition, disability, or because they are caring for a severely disabled person.
There is no minimum requirement for the number of hours worked, but the employment must be paid, meaning volunteers who only receive expenses do not qualify.
Parents on zero‑hours contracts can claim childcare costs if they’ve paid to have care in place for work but end up getting fewer shifts than expected.
Parents on sick leave getting Statutory Sick Pay, or those on maternity, paternity, or adoption leave receiving statutory pay, remain eligible for help.
Claimants can receive support for all children they are responsible for until the August 31 following the child’s 16th birthday.
Your childcare must be with “registered” childcare providers.
Usually that means they registered with OFSTED, the Care Inspectorate in Scotland or the Care Inspectorate Wales.
That could include nurseries, preschools, after-school clubs, breakfast clubs, childminders, nannies and holiday clubs.
To apply for help with childcare costs through Universal Credit, update the journal in your Universal Credit online account.
You can also speak to a Universal Credit adviser at your local jobcentre or ask your work coach to make the application on your behalf.
Any support you’re granted is not a loan, so you will not have to pay the money back.
Are you missing out on benefits?
YOU can use a benefits calculator to help check that you are not missing out on money you are entitled to
Charity Turn2Us’ benefits calculator works out what you could get.
Entitledto’s free calculator determines whether you qualify for various benefits, tax credit and Universal Credit.
MoneySavingExpert.com and charity StepChange both have benefits tools powered by Entitledto’s data.
You can use Policy in Practice’s calculator to determine which benefits you could receive and how much cash you’ll have left over each month after paying for housing costs.
Your exact entitlement will only be clear when you make a claim, but calculators can indicate what you might be eligible for.
What other childcare help is available?
There are a range of tax breaks and grants to help make childcare more affordable.
You can usually use them for care like registered childminders, nannies, playschemes, nurseries, and holiday clubs.
It’s always worth checking the government’s handy childcare costs calculator to find out which scheme will save you the most money, as not all of them can be used at the same time.
Free childcare for working parents
You may be able to get 30 hours of free childcare a week through the free childcare for working parents scheme.
Your child must be aged 9 months to 4 years old and you must live in England.
To be eligible for free childcare, you (and your partner, if you have one) need to both:
- In work or about to start a new job
- Earn over a certain amount
You can get 30 hours of free childcare per week for 38 weeks of the year.
You will not be eligible if either:
- Your child does not usually live with you
- You or your partner have an expected adjusted net income of over £100,000 in the current tax year
Over the next three months you and your partner (if you have one) must each expect to earn at least:
- £2,539.68 before tax if you’re aged 21 or over (equivalent to £195.36 per week)
- £2,080 before tax if you’re aged 18 to 20 (equivalent to £160 per week)
- £1,570.40 before tax if you’re under 18 or an apprentice (equivalent to £120.80 per week)
You can apply from when your child is 23 weeks old.
Find out more by visiting gov.uk/free-childcare-if-working/apply-for-free-childcare-if-youre-working.
Tax-free childcare
If you don’t qualify for Universal Credit you may qualify for tax-free childcare.
You can get up to £500 every three months – up to a maximum of £2,000 a year – for each of your children to help with the costs of childcare.
If your child is disabled, it’s even more – £1,000 every three months, up to £4,000 per year.
To receive the tax-free benefit you need to create an online childcare account.
For every £8 you pay into this account, the government will add £2 which you can use to pay your approved provider.
Find out more by visiting gov.uk/tax-free-childcare.
Child benefit
You can get child benefit if you’re responsible for a child aged under 16, or if they are under 20 and in approved education or training.
Child benefit is currently worth £26.05 a week for the eldest child or only child.
For each subsequent child, parents get £17.25 a week.
The free money is paid every four weeks, and there’s no limit to how many children you can apply for – though only one person can claim for each child.
If you earn more than £60,000, you will need to repay some of your child benefit under the high income child benefit charge.
If you earn £80,000, you will need to repay the full amount.
Find out more by visiting gov.uk/child-benefit.
